KAZAKH President Nursultan Nazarbayev has won backing for his plan for a single world currency from an intellectual architect of the euro currency, Nobel-prize winner Professor Robert Mundell.
That's from The Australian. As Mundell has argued, little countries stand to benefit most from a world currency. Consider this:
In a world of big international banks and multinational corporations, there is not much scope in practice for the monetary independence of any except a few large countries.
Mundell's argument hinges on economies of scale in convenience, information, policy, and insulation from international monetary shocks. Ultimately, he seems most concerned about inflation, and he believes inflation can be minimized by minimizing the number of currency issuers. I don't believe that. As he says, from 1949 to 1973 there was a de facto world currency, the US dollar, since nearly everyone was pegged to it. That ended when we went off the gold standard, and then engaged in double digit inflation throughout the 1970s. So what is to prevent a world central bank from doing the same? Say the UN institutes a world central bank. Can we really trust the UN to produce a steady money supply, transparently and without corruption, avoiding the temptation to abscond with the dough, aka seignorage? How transparent are central banks now? (try this link)
I believe money is like all goods in that quality matters, and thus reputation for quality matters. Hence, we need competition, and lots of it. Free banks did that for us, and they can do it again.